FPT set for buying into EVN

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The prime ministerial decision on January 26 relating to an equitisation proposal of EVN Telecom, an arm of Electricity of Vietnam (EVN Group) allows for future acquisition deals between EVN Telecom operators.

Under the decision, EVN Telecom’s parent group EVN will hold the majority stake in its affiliate partner with 50.6 per cent, while FPT and FPT Telecom, which are strategic partners of EVN Telecom, will hold 49 per cent, and EVN Telecom staff will hold 0.4 per cent. EVN Telecom’s chartered capital was around VND2.9 trillion ($145.5 million).

The decision has decreased FPT’s enthusiasm as the group expected to hold the majority stake of EVN Telecom with 60 per cent (comprising 44 per cent held by FPT Group and the remaining 16 per cent held by FPT’s arm FPT Telecom).

FPT Management Board resolution released on October 30 last year read that the corporation would issue corporate bonds with a total value of no higher than VND2 trillion ($100 million) for the deal this year.

The price sale for the strategic partner will be negotiated by both sides and it was initially estimated at VND20,000 a share.

The sale is expected to handle the financial difficulties of EVN Telecom over implementing its telecom projects this year. EVN Telecom reportedly earned VND2.8 trillion ($140 million) of revenue in 2010, meeting only 61 per cent of its targeted revenue for the year.

“The reasons include financial difficulties and marketing customer care strategies which did not match up with the market pace as well as inactive policies in tariffs, promotions and service-quality management in a fiercer competition context,” said an official from EVN Telecom.

Among telecom services, EVN Telecom earned only VND5.6 billion ($280,000) from 3G services in 2010, meeting only 1.1 per cent of its targeted revenue.

The revenue from international and domestic submarine channel circuit leasing, also lagged behind targets, meeting only 19.8 per cent for international circuit leasing target and 22.2 per cent for domestic leasing target.

The Government Office in October last year released the prime minister's conclusion in principle on EVN Telecom's equitisation and demanded that EVN, FPT and FPT Telecom hold the majority stake in EVN Telecom.

The total of FPT’s revenue for 2010 was VND20.5 trillion ($1.25 billion), a year-on-year increase of 9.5 per cent against the figure in 2009. Its telecom sector made up 11 per cent.